In a showdown between tax-free savings accounts and registered retirement savings plans, Canadians have a clear favourite: more than half said they prefer to put their money in a TFSA, according to a new survey by the Bank of Montreal (BMO).

The problem is almost one-third (32 per cent) don’t know the difference between the two savings plans. Among millennials, 56 per cent said they don’t have an RRSP. In contrast, 67 per cent of each of generation X and baby boomers are saving into an RRSP.

Read: Total RRSP contributions rise as number of contributors declines slightly

Baby boomers have been exemplary long-term savers, which could be why they’re now turning to TFSAs — 69 per cent said they’d choose a TFSA over an RRSP this year , said Mathieu Lepine, head of term investments at BMO, in a press release. 

“It’s a positive indicator to see Canadians flocking to TFSAs — the savings vehicle provides a good amount of flexibility,” he said. “Leveraging both accounts simultaneously can provide even greater value over the long term. As Millennials start earning more and turn their minds towards retirement, RRSPs will nicely supplement what is being built up in the TFSA.” 

This article originally appeared on Benefits Canada‘s companion site,

Copyright © 2020 Transcontinental Media G.P. Originally published on

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